Can non-alcoholic beer be a substitute for beer? Evidence from differentiated product demand model estimation using scanner data

Non-alcoholic (NA) beer, a beverage that tastes like beer and contains no/little alcohol, has seen growing world-wide popularity as a potential substitute of beer. To elucidate consumer demand and profitability of NA beer, this study estimated price elasticities and price-cost margins of beer and NA beer at brand level in the case of Japan, using a structural demand model of differentiated products and a purchase data scanned by 30,000 consumers. According to the empirical result, NA beer demand is responsive to prices of some regular and premium beer brands as well as NA beer brands while beer demand is not responsive to NA beer prices. This implies that (1) some consumers of regular and premium beers consider NA beer as a substitute although NA beer consumers do not recognize beer as a replacement; (2) although low-malt, new-genre (alcoholic drinks with beer-like taste), and NA beers have some common product characteristics, consumers of low-malt and new-genre beers have different preference from that of NA beer consumers; (3) unless prices of NA beer brands increase, certain amount of demand for NA beer can be expected to remain irrespective of price levels of beer brands. Price-cost margins of producing NA beer were found to be similar to those of regular and new-genre beers while price-cost margins for premium beer were small and those for low-malt beer were large.


Issue Date:
2016
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/235734
Total Pages:
25




 Record created 2017-04-01, last modified 2017-08-29

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